Correlation Between Anhui Conch and Talanx AG

Can any of the company-specific risk be diversified away by investing in both Anhui Conch and Talanx AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Anhui Conch and Talanx AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anhui Conch Cement and Talanx AG, you can compare the effects of market volatilities on Anhui Conch and Talanx AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Anhui Conch with a short position of Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Conch and Talanx AG.

Diversification Opportunities for Anhui Conch and Talanx AG

-0.6

Correlation Coefficient

Anhui Conch  Talanx AG

Excellent diversification

The 3 months correlation between Anhui and Talanx is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG and Anhui Conch is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Anhui Conch Cement are associated (or correlated) with Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Anhui Conch i.e., Anhui Conch and Talanx AG go up and down completely randomly.

Pair Corralation between Anhui Conch and Talanx AG

Assuming the 90 days horizon Anhui Conch Cement is expected to generate 3.0 times more return on investment than Talanx AG. However, Anhui Conch is 3.0 times more volatile than Talanx AG. It trades about 0.08 of its potential returns per unit of risk. Talanx AG is currently generating about 0.05 per unit of risk. If you would invest  197.00  in Anhui Conch Cement on October 20, 2024 and sell it today you would earn a total of  60.00  from holding Anhui Conch Cement or generate 30.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.04%
Values	Daily Returns

Anhui Conch Cement  vs.  Talanx AG

Anhui Conch Cement

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Conch Cement are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Anhui Conch is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Talanx AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anhui Conch and Talanx AG

The main advantage of trading using opposite Anhui Conch and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch position performs unexpectedly, Talanx AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Talanx AG will offset losses from the drop in Talanx AG's long position.

The idea behind Anhui Conch Cement and Talanx AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.